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Published: 18/07/2017
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Whether you want to buy a new car, make home improvements, pay for a wedding or have any other kind of significant purchase in mind, you may have considered applying for a personal loan. Well, you're picking a great time to do it! Competition remains fierce as providers continually launch record low rates, but you may want to be quick about it, as those cheap loans may not be around for long.

Record low repayments

TSB has become the latest provider to join the price war, with it launching the cheapest ever loan rate (for £5,000 to £7,499 loans) last week. It now comes with an APR of just 3.3% for terms of between one and five years, the kind of rate that used to be reserved for larger loan amounts, which means it's never been cheaper to get a £5,000 loan – and your repayments will never have been lower.

For example, a £5,000 loan over three years will now cost just £146.06 per month with this particular deal, but it's worth bearing in mind that it's only the representative rate. As such, only 51% of applicants will receive it – and you'll need a stellar credit rating to stand a chance of doing so – but it could still be worth a try!

Act fast

However, while rates remain at highly competitive levels for the time being, they may not stay that way for long – which means you'll need to act fast if you want to snap up a cheap deal. Start the process by making sure your credit score is up to scratch, and from there you'll want to use our personal loan calculator to find the best loan rate for you.

Why could rates increase?

It all comes down to a combination of base rate and the wider lending environment. There's growing speculation that base rate could increase in the near-future – largely in an attempt to limit rising inflation – and while there's no precise indication of when this could happen, it certainly won't stay at 0.25% forever.

However, any increase could have a knock-on effect in the wider financial world, potentially leading to higher interest rates across the board – but while savers could benefit from an increase in rate, borrowers won't. There's the chance that personal loan rates could begin to rise as well, leading to higher repayments in the process, which will make it even more important to compare personal loans to get the best deal possible.

However, it's hoped that any rise in base rate will be minimal, and there's no telling whether or not all providers will even pass it on, nor how quickly they'll respond. Even so, with rates currently so low, the only way for them to go is up, so it makes sense to plan any borrowing – provided you're completely confident you can afford it, of course – sooner rather than later.

Tighter lending conditions

Then there's the fact that lending conditions are set to be tighter, which could have two potential consequences – lenders could begin to raise rates in order to reduce the number of applications they receive and limit availability, but even if you apply, you'll find it harder to be accepted.

According to the Bank of England's latest Credit Conditions Survey, the availability of unsecured credit (which includes things like personal loans, credit cards and overdrafts) fell between May and June, with a further decrease expected in the next three-month period. This is thought to have been driven by a changing appetite for risk, together with the uncertain economic outlook; as a result, lenders are beginning to tighten credit scoring criteria, and are set to do so further in the coming three months.

This reiterates the importance of working on your credit score, because if it's anything less than gleaming, it'll be even harder to be accepted for credit in the months and years ahead – and that'll be the case no matter what happens to personal loan rates.

What next?

Find out how to improve your credit score

Use our loan calculator to take advantage of the cheapest personal loan rates – while you still can!


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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